Alexander Hall produced an analysis based on the average first-time buyer deposit and a person saving a fifth of their net income while renting, compared to someone saving the monthly cost of renting while living with family.
Recent Government figures showed the average first-time buyer property was worth £245,208, meaning buyers would need a 15% deposit of £36,781.
Alexander Hall found it would take the average renter 85 months, or just over seven years, to raise the required £36,781 for a mortgage deposit when saving 20% of their net income each month.
However, if the same renter were to move back home with their parents, they would be able to raise this in 32 months, or almost three years.
This means a renter moving back in with family would be able to buy their first home four-and-a-half years sooner than someone who continues to stay in the rental market.
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Stephanie Daley, director of partnerships at Alexander Hall, said: “Traditionally, the rental market has acted as the stepping stone to homeownership for the vast majority, but with both house prices and rents climbing at a phenomenal rate, many renters are now finding that they simply can’t make the jump.
“Not only is the task of saving a mortgage deposit a sizable one, but when combined with the high cost of renting, it can prove impossible.”
Alexander Hall’s analysis found that while the average deposit size had increased by 35% in eight years, the average cost of renting had also risen by 34% to £1,307. Although earnings have also gone up by 35%, the average renter spends 41% of their gross monthly income or half of their net income on rent.
She added: “So whilst living with your parents at a more mature age may not be ideal, it will likely mean you can get on the property ladder earlier.
“Lenders understand how difficult it is to save for a deposit and we are now seeing some really good innovation at low deposit levels, such as Accord’s £5,000 deposit option and Skipton’s Track Record 0% deposit mortgage for those who are renting. Plus, a number of lenders are now offering stretched income multiples to help first-time buyers get the borrowing they need.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: First-time buyers moving back home get on property ladder 4.5 years faster
